Arsenal reported a decline in full-year operating profit as increased wage costs offset a rise in commercial revenue. Underlying operating profit fell to £45.8m in the year to end May from £56.8m the year before.
Arsenal reported a decline in full-year operating profit as increased wage costs offset a rise in commercial revenue. Underlying operating profit fell to £45.8m in the year to end May from £56.8m the year before.
Arsenal, who have been criticised by fans for lagging behind rivals such as Manchester City and Manchester United in investment on the playing front, said player wages increased to £124.4m from £110.7m the year before. That represented 55.2 percent of total football revenues, a sharp increase on the 49.7 percent level seen the previous year. However, it is a figure that still compares favourably with many other clubs.
‘Our primary objective, as we take the club forward, will always be success on the field,’ stated chief executive Ivan Gazidis. ‘To give the club the best opportunity to achieve this, we must drive a virtuous circle of increased revenue, increased investment in the team and a larger engaged fan base and we must do this in a way which is self-sustaining and protects the long-term future of the club.’
Arsenal said revenue decreased to £255.7m from £379.9m the year before, reflecting the expected lower level of sales of apartments at Highbury Square, the site of their old stadium. Some 69 apartments were sold during the year generating £30.3m pounds of revenue, compared with 362 sales generating £156.9m the previous year.
Matchday revenue fell to £93.1m from £93.9m, reflecting fewer Champions League games. Broadcasting revenue was marginally higher at £85.2m from £84.6m the year before due to the club’s extended runs in the FA Cup and League Cup. Combined retail and commercial revenues rose to £46.3m from £43.9m.
The Emirates Stadium debt, long considered a millstone, is in fact encouragingly cheap. The club saved £4m on the previous year’s debt payments, down to £14.2m from £18.2m. But although property developments could drive a £40m windfall, Arsenal cannot rely on past reserves and property revenues forever. This means they must grow football revenues to maintain their self-sustaining template.
As we noted in an earlier story, Stan Kroenke, Arsenal’s majority shareholder since April, separately said on Friday how he intends to bring Arsenal’s commercial revenues to the level of Manchester United’s. The annual report gives an indication of how big is the gap between the two clubs in this area. Arsenal’s commercial revenues were marginally up to £46.3m, gaining £2.4m on the previous year; over the same period United’s reached £103.4m.
This could continue to constrain Arsenal in the transfer market until the headline shirt-sponsorship agreements with Nike and Emirates expire in 2014.
The 2011/12 season will be the first year clubs will be assessed under UEFA’s new Financial Fair Play rules, designed to stop clubs spending more than they earn, and Gazidis said the club are well placed to comply with the new regime.
Tim Payton, spokesperson of the Arsenal Supporters Trust, said the results were ‘not surprising. The problem is the very low amount of commercial income compared to say, Manchester United,’ he said. ‘The Arsenal model is struggling to keep up with the top three clubs and it’s got a real challenge to stay competitive until 2014 when new retail deals are negotiated.’